Opalesque Industry Update - Global financial markets recovered from a sharp intra-month commodity decline, as US large cap equities ended the month of April at record highs once again. Global equity markets were mixed for the month, with gains in US large cap, Technology, Healthcare and Financials partially offset by weakness in small cap, Energy and commodity sensitive exposures. European equities were led by Italian equities, which posted a large gain on optimism over recent political developments, equities in France, Spain, Netherlands, Germany and Switzerland also gained. The Nikkei again led gains for Asian equities, Australia, Philippines & India also gained, while China & Korea posted declines. Commodities fell sharply for the month, with Gold posting the largest 2 day decline in over 30 years, Silver, Platinum and Oil also posted sharp declines. Agricultural commodities were mixed with sharp gains in Hogs and Soybeans offset by declines in Lumber & Rice. US & European bond yields posted declines, led by the sharp decline in Italian bond yields; US yields fell across most maturities, as yields also declined in France, Spain, Netherlands, Germany and Switzerland.|
The US dollar gained to a new 4 year high against the Japanese Yen on expectations of continued Bank of Japan stimulus, although the Dollar declined against the Pound, Euro & Swiss France. Hedge funds posted gains for the 6th consecutive month and 9th month in the last 10, with the HFRX Global Hedge Fund Index rising +0.62% for April; the HFRX Market Directional posted a gain of +1.63%.
HFRX Event Driven Index posted a gain of +0.95% for April, leading all strategies and posting a sixth consecutive monthly gain with contributions from Equity Special Situations, Merger Arbitrage and Distressed strategies. The HFRX Special Situations Index gained +1.20% with contributions from transactions in the Communications, Financial and Cyclical sectors, Activist exposure also contributed to gains. The HFRX Merger Arbitrage Index posting a gain of +0.72% as M&A activity continued with contributions from transactions in FirstMerit/Citizens Republic Bancorp, KKR/Gardner Denver, Renasant/First M&F, Liberty Global/Virgin Media and Berkshire/Heinz. The HFRX Distressed Index posted a gain of +0.85% from European Telecom exposure as well as exposure to Energy, Consumer and Utilities.
HFRX Equity Hedge Index posted a gain of +0.56% for April, posting a record 11th consecutive monthly gain, the longest period of consecutive monthly gains since Index inception. The HFRX Fundamental Value Index gained +0.62%, with contributions from Japanese and Emerging Market equities, as well as large cap exposure to the US Consumer and Financials. The HFRX Fundamental Growth Index gained +0.47% with contributions from exposure to Asian equity, Industrial, Financial and Consumer sectors. The HFRX Market Neutral Index posted a gain of +0.47% from contribution from factor based, trading and behavioral strategies.
The HFRX Relative Value Arbitrage Index posted a gain of +0.47% for April, also posting a 6th consecutive monthly gain, with contributions from Convertible, Multi-Strategy and Corporate Fixed Income strategies. The HFRX RV: Convertible Arbitrage Index gained +2.20%, the strongest gain since 2009, with gains concentrated in exposure to Japanese convertibles, with US & European special situations also contributing to gains. The HFRX RV: Multi-Strategy Index posted a gain of +0.29%, with contributions from US & Asian credit exposures and Commodity Arbitrage strategies, while the HFRX Fixed Income Credit Index gained +1.12%.
HFRX Macro Index posted a gain of +0.50% despite commodities posting steep declines, with positive contributions to Index performance from Fixed Income and Currency strategies. The HFRX Emerging Markets Index posted a gain of +2.32% with gains in performance in Emerging Asia and Middle East exposures. The HFRX Macro: Systematic Diversified Index posted a narrow decline of -0.05% as commodities posted sharp declines across Gold & other Metals, with positive contributions from long-term trend-following strategies offset by declines in short-term strategies from reversals experienced in the metals, currencies and fixed income markets.